One of the biggest and most exciting decisions a person makes in their lifetime is the purchase of a new home.

It’s important to remember, though, that selling a home is an equally exciting and scary time.

Both sellers and buyers are expecting to come out having made the best deal possible, which makes for interesting negotiations in a competitive market.  Understanding the art of negotiation is crucial in reaching the most desirable agreement and purchasing a dream home for a great price.

A good real estate agent knows the market inside and out and has the expert negotiating skills to get a deal a buyer enjoys and a seller agrees upon.

Here are three of the top negotiating skills a buyer should understand before purchasing a home.

Are you purchasing a home for the first time? Check out our latest article on the “5 Tips for First Time Homebuyers.”

What’s The Market?

The type of market you are buying in varies from neighborhood to neighborhood.  Knowing what type of market you are looking in allows you to understand what type of offers will work to your advantage before you present an offer and potentially get declined.  The three basic types of markets are a buyer’s market, a seller’s market, or a balanced market.  Here is what you need to know:

A Buyer’s Market: More homes are for sale than there are buyers offering

– This works to a buyer’s advantage

– Always present an offer at LEAST 10% below asking price

A Seller’s Market: More buyers seeking a home than number of homes on the market

– This works to the seller’s advantage

– Offer a fair price, VERY close to asking price (and quickly).

A Balanced Market: Equal parts buyers and sellers

– This makes for an even playing field for buyers and sellers

– Research other offers nearby to understand your offer price

As you can see, each type of market will require an entirely new set of negotiating skills.  A good real estate agent will know what your market is, and what type of tactic to take.

Know Your Seller

Understanding your seller, and what is important to them, sounds like obvious advice, but often goes unfollowed.

Most buyers are so consumed in finding the perfect place, they often forget about how the seller is feeling.  For most sellers, a fair price is of most importance, but what is second?  The lister has most likely spent years in their home, producing countless memories.  Maybe the treehouse in the backyard was built by a man and his son.  Perhaps the front door, while bright red, was the location of their children’s ‘first day of school’ photos.

It’s amazing how many times real estate agents see listers consider lower prices because a buyer agrees to keep one of their most valuable memories intact.  Knowing your seller could help you negotiate the items that are 2nd, 3rd and 4th most important to them to the point where the price becomes less important!

Negotiating Contingencies

Contingencies are especially important when you are buying in any type of market.  Simply put, contingencies are put in place to help a buyer back out of a contract based on certain circumstances.  These can include loans, home inspection, insurance, closing costs, the title, and much more.

As a buyer in a seller’s market, presenting an offer with a preapproved loan from a secured lender removes any loan contingencies a seller might be worried about.  In a buyer’s market, negotiating price after a home inspection is crucial.  If the home proves to need $1,000 in repairs, negotiate $2,000 off of your price.  Contingencies are a buyer’s best friend and it is important to understand how they work in order to negotiate wisely.

As you can see, understanding the ins and outs of the home buyers market is imperative when deciding what type of negotiating strategy to implement.  A professional real estate agent will know everything about the current real estate market you are looking at and therefore be able to help you negotiate more effectively.

Looking to Purchase a Home in the Birmingham Area?

Turn to the professional real estate agents at ARC Realty know your market, contact ARC Realty today, and let’s get to negotiating!